The Origins and Evolution of a Paradigm Shift in Spend Management Technology – Jon Hansen on the Coupa Cabana

Posted on September 12, 2011

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In addition to this week’s series on bridging the disconnect between finance and purchasing – which started today with the post Don’t sweat the small stuff? Why industry experts point to Indirect Material Spend as an important reservoir of untapped savings!, I also have a second series running over on the Coupa Cabana Blog regarding the history of spend management including the paradigm shift from traditional ERP-centric applications to the more nimble and technologically advanced SaaS solutions.

It is an interesting series and certainly one worth taking a few moments to click through to the Coupa Cabana site.  In other words don’t wait for the movie as the book (or in this case series) is much better.

In the meantime, and to provide you with a sense as to what I discuss or write as the case may be, the following is a brief excerpt from the first article.

Part 1 excerpt from the 5-Part Coupa Cabana Blog Series:

When I was approached to write a five-part series on the current state of spend management technology, one of the first things that came to mind was a Larson Far Side cartoon where the mother and father snake were lamenting the fact that they could not contain their bountiful off-spring within their old wooden-barred crib.

This is a great cartoon on so many levels. In the context of spend management technologies, the parent snakes are ERP vendors like SAP, Oracle, and other older businesses that came of age during the boom years of behind-the-firewall enterprise software (like the “now you see it, now you don’t” DNA-altered Ariba). But the market has changed, and despite the old guard’s futile efforts to control and contain the inevitable evolution to a more efficient and effective reality, the baby snakes are taking over. The new reality I am talking about, of course, is one where true SaaS vendors make old tools obsolete.

What’s interesting is that the big boys knew as far back as 2000 that the paradigm shift the industry is now experiencing was inevitable. Vendors like Coupa are now taking the lead, and the old guard saw it coming.

Back in 2000, the Software & Information Industry Association’s (SIIA) eBusiness Division released a white paper titled “Strategic Backgrounder: Software as a Service.” As part of my original coverage I wrote the following:

In its opening paragraph, this seminal effort to explain the evolution from traditional licensing models in which “packaged desktop and enterprise applications will soon be swept away by the tide of Web-based, outsourced products and services,” accurately establishes the core principles or elements of the SaaS or on-demand model. Specifically, the paper states that the new model will “remove the responsibility for installation, maintenance and upgrades (and the associated heavy costs) from over-burdened MIS staff.” And that as a result, “packaged software, as a separate entity will cease to exist.”

I then go on to write:

“Even though the SIIA report at the time of its publication stressed that ‘due to technical and business issues, such drastic predictions,’ had not yet happened, it nonetheless sent up the first flare indicating that a change was definitely on the horizon. A change will forever alter the software industry landscape.”

There’s no denying some business and technical issues persist, but there is mainstream recognition that traditional big-budget licensing and consulting models are no longer a viable option (not that they ever were).

Once again, be sure to click through to the Coupa Cabana Blog to read this post in its entirety, as well as the other posts in the 5-Part Series.

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Posted in: Commentary